Latin America Advisor

A Daily Publication of The Dialogue

Who Should Lead the Inter-American Development Bank?

The United States nominated Mauricio Claver-Carone to head the Inter-American Development Bank. // File Photo: U.S. State Department. The United States nominated Mauricio Claver-Carone to head the Inter-American Development Bank. // File Photo: U.S. State Department.

The administration of U.S. President Donald Trump has announced that it will nominate Mauricio Claver-Carone, currently the head of Western Hemisphere affairs at the National Security Council, to be the president of the Inter-American Development Bank, breaking an unwritten agreement since the bank’s inception that a Latin American would lead it. Former President Laura Chinchilla of Costa Rica has also entered the race. The IDB’s member states and board of governors are scheduled to elect the organization’s new president in September. What does the break in protocol mean for the IDB and for the role of the United States within the bank and in the Western Hemisphere? Given the United States’ control of 30 percent of the vote, is Claver-Carone a shoo-in for the bank’s presidency? What challenges will the IDB’s next leader face, and what should the bank’s priorities be during such a critical time for the region?

José Antonio Ocampo, professor at Columbia University and former Colombian finance minister, and Kevin P. Gallagher, professor and director of the Global Development Policy Center at Boston University: “According to the World Bank, Latin America is predicted to be the region of the developing world worst hit by the Covid-19 crisis. The U.N. Economic Commission for Latin America and the Caribbean estimates that the number of poor will increase by 30 million or more due to the crisis. The region desperately needs to harness the fiscal space and the international financial support to fight the virus and its economic and social effects and build its economies back better than before. The Inter-American Development Bank has a 60-year record of helping countries to strengthen their development patterns and recover from crises. During that time, in cooperation with the United States, the IDB has earned the trust of the countries across the Americas. Breaking the 60-year tradition of having a Latin American at the helm, which was President Eisenhower’s intent when he led the creation of the IDB, will erode that trust at a time when the institution is needed most. It is also one of the very few international organizations led by a Latin American. It should be added that the United States has always had the number-two position in the institution, which is an appropriate way of recognizing the United States as a large shareholder. Finally, we should not forget that a U.S. citizen has always been president of the World Bank, and it would be unfortunate that a U.S. citizen would also lead a regional multilateral development bank. We therefore strongly support the principle that the presidency of the Inter-American Development Bank should continue to be held by a Latin American, and fully support in that regard the statement issued by five prominent former presidents of Latin American countries (Cardoso, Lagos, Sanguinetti, Santos and Zedillo) endorsing that principle. The region has put forth candidates of high merit who can fruitfully continue that 60-year tradition.”

Marco Rubio, member of the U.S. Senate (R-Fla.): “I’m pleased that the administration has nominated Mauricio Claver-Carone to be president of the Inter-American Development Bank. I have no doubt that he will faithfully continue his work to promote initiatives that advance economic prosperity, stability and democratic order in our hemisphere.”

Eduardo Ulibarri, sociopolitical analyst and former ambassador of Costa Rica to the United Nations: “I am afraid that, more than a break in protocol, Claver-Carone’s nomination means a break in good faith among partners and a great risk for the integrity and the role of the IDB. Given this prospect, former President Laura Chinchilla is the safest bet for the bank. She deserves the support of its members. Professionally and technically speaking, Claver-Carone is a good candidate. The problem is his record as chief officer for Latin America in the National Security Council, his uncompromising ideological zeal, his abrasive style and his closeness to President Donald Trump, whose commitment to multilateralism and regionalisms is, to say the least, highly doubtful. The first risk is that, given the eventual success of his candidacy, the IDB may become more an ideological battlefield than a policy-oriented financial institution; more a ground for transactions than for consensus. And this will occur precisely when the hemisphere and the bank face one of the most acute challenges in recent history: Covid-19, economic deceleration (or recession), increasing poverty and potential social turmoil. Such is the second, and long-lasting, big risk. Laura Chinchilla will offer a safe, competent and more open option. There are no doubts about her democratic credentials. Her policymaking experience, as president of Costa Rica and beyond, is unmatched by the U.S. candidate and would provide the bank with more trusting, stable, competent and forward-looking leadership. However, good reasons are not enough for success. The diplomatic and financial clout of the United States, both inside and outside the IDB, is a monumental challenge, and it has already been noticed through at least eight countries’ support of Claver-Carone. Competition will be intense. At the same time, it will be unbalanced.”

Cynthia J. Arnson, director of the Latin America program at the Woodrow Wilson Center: “Donald Trump came into office pledging to put ‘America First.’ His withdrawal from the Paris climate accord and the 12-nation Trans-Pacific Partnership demonstrated his suspicion of multilateralism and preference for a muscular, go-it-alone foreign policy. The nomination of Mauricio Claver-Carone to head the Inter-American Development Bank shows not suspicion, but disdain for regional norms and sensitivities. Claver-Carone’s economic credentials do not appear to be in question; he has held senior positions in the U.S. Treasury and IMF. What is at stake is more fundamental: it’s respect—for Latin American leadership and the longstanding tradition upheld by all former U.S. administrations that Latin America’s most important international financial institution be led by someone from the region. The issues for which Claver-Carone is best known—hardline policies against Cuba and Venezuela—are (with the exception of the issue of Venezuelan refugees) irrelevant to resolving the region’s profound economic crisis. The Trump White House has been out of step with the region on key issues the IDB must continue to address, including climate change and progressive tax reform. Just as egregious is the timing, only months before the November U.S. presidential election. The vast social disparities brought to the fore by the Covid-19 pandemic require urgent attention, not just by the private sector but also by an efficient and reformed state, itself under heavy citizen pressure to deliver quality services and greater equality. The egoisms and nationalisms behind Latin America’s failure to unite around a successor to Luis Alberto Moreno have opened the door to a reassertion of U.S. unilateralism. The region, and U.S. soft power, will suffer as a result.”

Andrés Martínez-Fernández, senior research associate at the American Enterprise Institute: “The next IDB president will face many challenges in the coming years. Chief among these is facilitating the region’s recovery from the Covid-19 pandemic. Latin America’s development bank will also need to address more deep-seated troubles, such as the inequality and corruption that helped spark widespread protests late last year. Now more than ever, the IDB needs to be a vehicle for promoting inclusive market-oriented economic growth and opportunity in the Americas. Closely related to this goal are priorities such as hemispheric economic integration, infrastructure development, the rule of law, and the empowerment of women and marginalized communities. Firm U.S. support for Mauricio Claver-Carone’s candidacy makes him the odds-on favorite to lead the IDB. Yet, the possibility that Claver-Carone would bring along the Trump administration’s aggressively politicized approach to international development is a valid source of unease for IDB staff and the region. Costa Rica’s subsequent nomination of former President Laura Chinchilla also shows a desire to maintain the IDB’s tradition of a regional president. However, Claver-Carone’s experience at the Treasury Department and the IMF, and with initiatives such as América Crece, offer reason to believe he would be a capable steward of the IDB. Claver-Carone’s tenure could also herald an unprecedented U.S. commitment to regional development and economic engagement after years of neglect have left numerous openings for exploitation by Chinese ambitions. If Claver-Carone’s bid for the presidency is successful, he will have to overperform to disprove skeptics and shepherd the integrity of the IDB and the United States as an economic partner.”

Editor’s note: Laura Chinchilla is a co-chair of the board of directors of the Inter-American Dialogue, which publishes the Advisor.

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